03 Jul 2017

2017 Summer Newsletter: What’s New in Real Estate, Market News, Legal News and Case Law

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What’s New:

Abolishment of Marital Status requirement in Michigan.

As you know, as of April 6, 2017, the dower statutes have been abolished. On June 15, 2017, the Governor signed the bill that eliminates the requirement to recite the marital status of a grantor on a conveyance or mortgage. Please note that this does not eliminate the requirement for the signature of a non-titled spouse on a mortgage other than a purchase money mortgage on a parcel which is his/her homestead.

Market News:

20% Downpayment is Dead. According to NAR’s latest data, the typical down payment for 60% of first-time home buyers is 6% or less. However, few adults 34 and younger (just 13%) realize they can buy a house with a down payment of 5% or less.

These low-down-payment programs aren’t new. The FHA has backed home loans with 5% down or less since the 1980s. Conventional loans, mortgages that aren’t directly backed by the government, have had them since the 1990s.

The 20% downpayment is now considered the gold standard and is most often used to quote mortgage rates. Many banks and lending institutions only deal with 20% conventional loans, as they are considered ‘safer’ and less risky than other lower down-payment mortgages. The following down payments are now considered “typical”:

  • Conventional loans: These can have down payments as low as 3% for qualified buyers. Some lenders offer grants to allow even lower money down. But for the past 12 months, most buyers seeking conventional financing put down 20%, according to Ellie Mae.
  • FHA loans: These are often used by buyers of modest means and require a minimum of 3.5% down.
  • VA loans: These are famous for offering mortgages that require no down payment at all. Still, LTVs averaged 98% over the past year, perhaps due to borrowers financing their closing costs.

A 20% downpayment is still a good idea for a multitude of reasons including that a borrower will not have to pay for mortgage insurance, his monthly payment will be lower and likely have a lower interest rate and lenders are more likely to compete for a borrower’s business, which may lead to more favorable lending terms.

Bottom line: There are strong arguments to be made for and against 20% down payments. It’s a decision that depends on a borrower’s particular financial situation, how long he/she plans on being in a home, and the housing market in the area.

Mortgage Market Update: Mortgage applications increased .6% from the prior week for the week ending June 16, 2107. Refinances increased to 46.6% of total applications. According to the latest data released by Freddie Mac, the 30-year fixed rate average decreased slightly from 3.91% to 3.9% with an average 0.5 point. The 15-year fixed rate average decreased from 3.18% to 3.17% with an average 0.5 point. The five-year adjustable rate average dipped from 3.15% to 3.14% percent with an average 0.5 point.

Legal News and Case Law:

Cell Tower: Fixture or personal property? In the Michigan Court of Appeals case Grand Traverse County Land Bank Authority (Plaintiff) v Verizon Wireless and Great Northern Broadcasting System, Inc. (Defendants), the Defendants appealed a Circuit Court ruling granting a judgment in favor Plaintiff that the broadcasting tower sitting on foreclosed real property was a fixture that was transferred with the land upon tax foreclosure. The property at issue was a 14-acre parcel which was vacant except for a 300-foot radio/cell tower and utility building. The underlying lease required Verizon to remove the tower upon termination of the lease, although it could obtain permission not to remove it and if Great Northern agreed to this, title to the improvements would transfer to Great Northern. Verizon replaced the tower and did not renew the lease, but told Great Northern that it did not intend to remove the tower. Great Northern had 2009 taxes which became delinquent and the county foreclosed on the property and subsequently filed suit to declare that the tower and utility buildings were fixtures that transferred to the county during the foreclosure process. The Circuit Court ruled in favor of the County and Great Northern appealed. Upon appeal, Great Northern contended that the tower was personal property because the lease allowed for removal of the tower, it was not permanently attached and could be moved and the County had considered it personal property because it offered to purchase the tower from Verizon separate from the land when it foreclosed. However, the Court of Appeals determined that because the tower was attached to the property, was a useful adjunct to the property’s use for radio signal broadcasting and the lease contemplated the tower would remain in place while Verizon used it (and potentially forever), the Circuit Court did not err in determining that the tower was a fixture and transferred with the real property upon foreclosure. Affirmed.

Corporate Settlement Solutions has many Michigan branch offices to serve you—Traverse City, Suttons Bay, Elk Rapids, Charlevoix, Bellaire, and Mt. Pleasant in addition to providing services throughout the eastern United States.

Maura A. Snabes, Esq., CES®, CLTP – Sr. Underwriting & Compliance Counsel

Phone: (231) 547-5220×102/802 Bridge St., Charlevoix, MI 49720

e-mail: msnabes@visitcss.com

This Newsletter may be construed as an advertisement as defined in Public Law 108-187. A recipient of this Newsletter may decline to receive future messages by making such a request to the above email address.

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About the Author


Ms. Snabes practices in the area of Real Estate and Corporate Law. Ms. Snabes has been the corporate legal counsel for a title company since 1994 and has been with Corporate Settlement Solutions since 2002, as the underwriting and claims counsel. She is a Certified Exchange Specialist® as certified by the Federation of Exchange Accommodators and is the founder and co-owner of Corporate Title Exchange Services which was founded in 1995 and which is a qualified intermediary for forward, reverse and build-to-suit tax-deferred exchanges. She regularly gives seminars on 1031 exchanges and other real estate matters to real estate and tax professionals in Northern Michigan. Ms. Snabes is highly involved with the community and is a member of the State Bar of Michigan; Charlevoix-Emmet Bar Association; Phi Alpha Delta Law Fraternity; Antrim-Charlevoix-Kalkaska Association of Realtors. She is also a licensed Michigan real estate broker.